Indian capital markets currently account for about 5% of Adani Group’s total outstanding borrowings, or ₹12,404 crore, as of March-end, 2024.
If longer-duration debt is included, the group will also be open to having as much as 15% of its debt from the local capital markets, Singh told ET, after launching Adani Enterprises’ maiden non-convertible debentures’ issue of ₹800 crore.
This issue by the flagship company of the Adani Group will open on September 4, and close on September 17. The debt instruments are available in tenures of 24, 36 and 60 months with an interest rate of 9.25%, 9.65% and 9.90%, respectively.
Adani Enterprises, which has outlined a capital expenditure of Rs 80,000 crore for the year for its various businesses including airports and roads, has a 9% cost of capital on a weighted average basis. Singh said that this NCD issue was a “small start” to the debt issues that the group would be bringing over the next two decades, reiterating that core infrastructure and energy development in a country must be done with the capital of the country.The group’s debt though domestic lenders, including banks and non-banking financial institutions, meanwhile, is 36% of their total debt mix, up by around 500 basis points through 2023-24 (Apr-Mar). Including working capital and long-term debt, Indian lenders have lent a total of Rs 88,100 crore to the Adani Group out of their total debt of Rs 2,41,394 crore as on March 31, 2024.Singh said that while businesses like metals and Poly Vinyl Chloride would be funded with debt from the domestic market, capital expenditure for Adani Green and Adani Energy Solutions would come from global markets.”What you look at is the risk-adjusted cost of capital, not the rate. If we want debt for 20 or 30 years, then on a risk-adjusted basis, global debt is cheaper. If you want three-year debt, then on a risk-adjusted basis, domestic debt is cheaper,” he said.
“That mix (between global and domestic debt) will continue to change depending on the kind of debt the business requires.”
While the Indian capital markets have a higher appetite for debt, Singh said that people’s experience with the maiden NCD issue is important. “The challenge is whether we can adequately create something that the domestic investor wants and needs,” he said.